In 2009, the Rhode Island General Assembly passed a statute that required National Grid, the state’s only electric distribution company, to solicit proposals for a project that “enhance[s] the electric reliability and environmental quality of the Town of New Shoreham [Block Island].” This provision promoted the development of an offshore wind project.

Six months later, Deepwater Wind, a project developer, and National Grid entered into a power purchase agreement. The Rhode Island PUC rejected the contract, finding it was not “commercially reasonable,” a factor that the statute required it to consider. Following the PUC’s rejection of the contract, the General Assembly amended the statute, changing the factors that the PUC must consider in its evaluation. Deepwater Wind and National Grid submitted an amended contract, which the PUC subsequently approved.

Benjamin Riggs, a Rhode Island citizen, filed two complaints against the PUC with FERC, arguing that the PUC’s approval is preempted by the FPA and PURPA and violates the dormant Commerce Clause. In each case, FERC declined to initiate an enforcement action. In August 2015, Mr. Riggs, joined by another Rhode Island citizen and the Rhode Island Manufacturers Association, filed substantially similar claims in federal district court in Rhode Island.

Plaintiffs allege that the PUC’s order approving the contract between Deepwater Wind and National Grid violates the FPA because it “intrudes on FERC’s exclusive jurisdiction to regulate wholesale transactions.” They further argue that it “erects obstacles” and “interferes” with FERC’s market-based pricing regime. They also claim that PUC’s approval of the contract “violates PURPA because it accords Deepwater Wind the benefits accorded by PURPA to a small power production facility without requiring that Deepwater Wind satisfy the statutory and regulatory requirements for such a facility.”

By approving a project located in Rhode Island, plaintiffs further allege that the PUC “discriminate[d] against out-of-state generators in intent and effect” in violation of the dormant Commerce Clause. Plaintiffs highlight that the statute requires the PUC to consider the project’s economic development benefits, and argue that such benefits are not a legitimate local purpose that justify discrimination under dormant Commerce Clause case law.

Three months after it reached a settlement with Massachusetts about a similar law, TransCanada intervened in the PUC proceeding and argued that the statute’s Deepwater Wind provisions were unconstitutional because they favored in-state generation by requiring National Grid to solicit proposals for an in-state project and thereby reduced the market for out-of-state generators.

An environmental organization and the Rhode Island Attorney General also intervened, arguing that the 2010 amendments to the statute were unconstitutional under the doctrine of separation of powers. They argued that the amendments impermissibly re-opened a quasi-judicial proceeding at the PUC and prescribed the outcome of that proceeding.

The Rhode Island PUC presumed that the statute was constitutional and approved of the contract between National Grid and Deepwater. The Rhode Island Supreme Court affirmed the PUC’s decision, but the constitutional issues were not before it.